eGain Announces Fiscal 2017 First Quarter Financial Results
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SUNNYVALE, CA -- (Marketwired) -- 11/09/16 -- eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2017 first quarter ended September 30, 2016.
Fiscal 2017 First Quarter Financial Summary
- Total revenue was $14.7 million ($16.0 million on a constant currency basis), compared to $16.5 million in the same quarter a year ago
- Subscription and support revenue was $10.9 million ($11.7 million on a constant currency basis), compared to $10.8 million in the same quarter a year ago
- Professional services revenue was $2.2 million, down from $3.2 million in the prior year quarter, with margin improving to 5% compared to negative 6% in the prior year quarter
- License revenue was $1.7 million, down from $2.4 million in the same quarter a year ago, as the company continued its transition to a SaaS based business
- Gross margin increased to 66%, compared to 61% in the year ago quarter
- GAAP net loss improved to $2.4 million, or $0.09 per share on a basic and diluted basis, compared to a GAAP net loss of $3.2 million, or a loss of $0.12 per share on a basic and diluted basis, for the year ago quarter
- Adjusted EBITDA improved to $75,000, compared to an adjusted EBITDA loss of $769,000 in the year ago quarter
- Cash flow generated from operations in the first quarter improved to $2.4 million, compared to cash flow used in operations of $5.6 million in the year ago quarter
- New subscription ACV (non-GAAP), which is the annualized value of new cloud and term license contractual obligations signed in the quarter, was $1.9 million, up 63% year over year (82% on a constant currency basis)
- New subscription and support ACV (non-GAAP), which is the annualized value of new cloud, support and term license contractual obligations signed in the quarter, was $2.1 million, up 15% year over year (30% on a constant currency basis)
Ashu Roy, eGain CEO, commented, "We are pleased with the continued acceleration in our shift to a SaaS based business model. As a result, during the quarter we saw a decrease in license revenue, reflecting our business mix shift to a SaaS model."
Eric Smit, eGain CFO, added, "As we successfully transition to a SaaS based business, we drove significant year-over-year improvement in gross margin and net loss in the first quarter. Despite the reduction in quarterly revenue, we achieved breakeven on an adjusted EBITDA basis and generated significant improvement in our cash flow from operations in the first quarter compared to the prior year."
Non-GAAP Financial Measures These reported results include Annual Contract Value (ACV), Constant Currency and Adjusted EBITDA as supplemental information relating to our operating results. Adjusted EBITDA is a non-GAAP financial measure, defined as net income/(loss), adjusted for the impact of purchase accounting adjustments to deferred revenue related to acquisitions, depreciation and amortization, stock-based compensation expense, interest expense, net, income tax provision (benefit), amortization of acquired intangible assets, acquisition-related expenses and severance and related charges. We define ACV as being the annualized value of new cloud and term license contractual obligations signed in the quarter. Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. eGain's management uses these non-GAAP measures to compare the company's performance to that of prior periods for trend analyses, and for budgeting and planning purposes. eGain believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. eGain urges investors to review the reconciliation and not to rely on any single financial measure to evaluate the company's business.
Quarterly Conference Call eGain will discuss its quarterly results today via teleconference at 2:00 p.m. Pacific Standard Time. To access the live call, please dial (888) 278-8471 (U.S. toll free) or (913) 312-1471 (international), and give the participant pass code 3718892. A live webcast of the call and slide presentation can be accessed from the investors section at www.egain.com. A replay of the conference call will also be available via telephone beginning approximately two hours after conclusion of the call and remain in effect for one week. To access the replay dial-in information, please click here. An archive of the webcast will also be available on the investors section at www.egain.com.
About eGain eGain customer engagement solutions power digital transformation for leading brands. Our top-rated cloud applications for social, mobile, web, and contact centers help clients deliver connected customer journeys in an omnichannel world. To learn more about eGain, visit www.egain.com.
Cautionary Note Regarding Forward-Looking Statements. This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include our belief that we are seeing and will continue to see benefits of the Company's transition to a SaaS based business, among other matters. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company's results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include, but are not limited to: our ability to capitalize on customer engagement; the success of organization changes; risks that our hybrid revenue model and lengthy sales cycles may negatively affect our operating results; risks related to our reliance on a relatively small number of customers for a substantial portion of our revenue; our ability to compete successfully and manage growth; our ability to develop and expand strategic and third party distribution channels; risks associated with new product releases; risks related to our international operations; our ability to invest resources to improve our products and continue to innovate; and other risks detailed from time to time in eGain's filings with the Securities and Exchange Commission, including eGain's annual report on Form 10-K filed on September 13, 2016, which is available on the Securities and Exchange Commission's Web site at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of the date hereof. The Company assumes no obligation to update these forward-looking statements.
eGain, the eGain logo, and all other eGain product names and slogans are trademarks or registered trademarks of eGain Corp. in the United States and/or other countries. All other company names and products mentioned in this release may be trademarks or registered trademarks of the respective companies.
eGain Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, June 30,
2016 2016
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,469 $ 11,780
Restricted cash 6 5
Accounts receivable, net 7,275 11,876
Deferred commissions 791 787
Prepaid expenses 1,168 1,480
Other current assets 531 426
------------- ------------
Total current assets 19,240 26,354
Property and equipment, net 1,379 1,688
Deferred commissions, net of current portion 374 325
Intangible assets, net 4,260 4,839
Goodwill 13,186 13,186
Other assets 1,676 1,671
------------- ------------
Total assets $ 40,115 $ 48,063
============= ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 1,907 $ 2,099
Accrued compensation 3,138 5,642
Accrued liabilities 4,666 5,670
Deferred revenue 15,473 12,672
Capital lease obligations 273 329
Bank borrowings 831 828
------------- ------------
Total current liabilities 26,288 27,240
Deferred revenue, net of current portion 2,511 3,045
Capital lease obligations, net of current
portion 116 153
Bank borrowings, net of current portion 15,632 20,223
Other long term liabilities 1,902 1,679
------------- ------------
Total liabilities 46,449 52,340
------------- ------------
Stockholders' (deficit) equity:
Common stock 27 27
Additional paid-in capital 342,925 342,689
Notes receivable from stockholders (81) (81)
Accumulated other comprehensive loss (1,545) (1,663)
Accumulated deficit (347,660) (345,249)
------------- ------------
Total stockholders' (deficit) equity (6,334) (4,277)
------------- ------------
Total liabilities and stockholders'
(deficit) equity $ 40,115 $ 48,063
============= ============
eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
----------------------
2016 2015
---------- ----------
Revenue:
Subscription and support $ 10,863 $ 10,842
License 1,650 2,426
Professional services 2,232 3,208
---------- ----------
Total revenue 14,745 16,476
---------- ----------
Cost of subscription and support 2,927 3,079
Cost of license 7 7
Cost of professional services 2,130 3,386
---------- ----------
Total cost of revenue 5,064 6,472
---------- ----------
Gross profit 9,681 10,004
---------- ----------
Operating expenses:
Research and development 3,675 3,900
Sales and marketing 5,240 6,668
General and administrative 2,031 2,246
---------- ----------
Total operating expenses 10,946 12,814
---------- ----------
Loss from operations (1,265) (2,810)
Interest expense, net (422) (333)
Other income, net 108 240
---------- ----------
Loss before income tax provision (1,579) (2,903)
Income tax provision (832) (334)
---------- ----------
Net loss $ (2,411) $ (3,237)
========== ==========
Per share information:
Basic and diluted net loss per common share $ (0.09) $ (0.12)
========== ==========
Weighted average shares used in computing basic
and diluted net loss per common share 27,108 27,022
========== ==========
Summary of amortization of purchased intangibles
from businesscombinations in the costs and expenses
above:
Cost of revenue $ 67 $ 67
Research and development $ 437 $ 437
Sales and marketing $ 67 $ 172
General and administrative $ 8 $ 19
Summary of stock-based compensation included in the
costs and expenses above:
Cost of revenue $ 45 $ 94
Research and development $ 88 $ 147
Sales and marketing $ 58 $ 132
General and administrative $ 45 $ 140
eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands)
(unaudited)
Three Months Ended
September 30,
----------------------
2016 2015
---------- ----------
Revenue $ 14,745 $ 16,476
Add: Purchase accounting adjustments to deferred
revenue related to acquisitions 16 20
---------- ----------
Non-GAAP Revenue $ 14,761 $ 16,496
---------- ----------
Adjusted EBITDA
Net loss $ (2,411) $ (3,237)
Add: Purchase accounting adjustments to deferred
revenue related to acquisitions 16 20
Depreciation and amortization 354 549
Stock-based compensation expense 236 513
Interest expense, net 422 333
Income tax provision 832 334
Amortization of acquired intangible assets 579 695
Acquisition-related expenses - -
Severance and related charges 47 24
---------- ----------
Adjusted EBITDA $ 75 $ (769)
---------- ----------
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
September 30, Constant
------------------ currency
Growth growth
2016 2015 rates rates [5]
-------- --------
Total subscription and support
revenue ACV[1]:
Subscription $ 26,299 $ 23,168 14% 21%
Support 17,905 19,860 -10% -1%
-------- --------
Total subscription and support
revenue ACV $ 44,204 $ 43,028 3% 11%
======== ========
Backlog [2] $ 44,775 $ 39,680 13% 20%
======== ========
Three Months Ended
September 30, Constant
------------------ currency
Growth growth
2016 2015 rates rates [5]
-------- --------
New subscription and support ACV
[3]
Subscription $ 1,901 $ 1,163 63% 82%
Support 238 691 -66% -57%
-------- --------
Total new subscription and support
ACV $ 2,139 $ 1,854 15% 30%
======== ========
Gross bookings [4] $ 12,740 $ 13,900 -8% 5%
======== ========
Revenue:
GAAP Subscription and support $ 10,863 $ 10,842 0% 8%
GAAP License 1,650 2,426
GAAP Professional services 2,232 3,208
-------- --------
GAAP total revenue 14,745 16,476
Purchase accounting adjustments
to deferred revenue related to
acquisitions 16 20
-------- --------
Non-GAAP revenue $ 14,761 $ 16,496 -11% -3%
======== ========
Cost of revenue:
GAAP subscription and support $ 2,927 $ 3,079
Add back:
Depreciation and amortization (224) (330)
Amortization of acquired
intangible assets (67) (67)
Severance and related charges (10) -
-------- --------
Non-GAAP subscription and
support $ 2,626 $ 2,682
======== ========
GAAP professional services $ 2,130 $ 3,386
Add back:
Depreciation and amortization (31) (69)
Stock-based compensation
expense (45) (94)
Severance and related charges - -
-------- --------
Non-GAAP professional services $ 2,054 $ 3,223
======== ========
GAAP total cost of revenue $ 5,064 $ 6,472
Add back:
Depreciation and amortization (255) (399)
Stock-based compensation
expense (45) (94)
Amortization of acquired
intangible assets (67) (67)
Severance and related charges (10) -
-------- --------
Non-GAAP total cost of revenue $ 4,687 $ 5,912 -21% -15%
======== ========
Gross profit:
Non-GAAP subscription and
support $ 8,253 $ 8,180
Non-GAAP license 1,643 2,419
Non-GAAP professional services 178 (15)
-------- --------
Non-GAAP gross profit $ 10,074 $ 10,584 -5% 4%
======== ========
Operating expenses:
GAAP research and development $ 3,675 $ 3,900
Add back:
Depreciation and amortization (46) (71)
Stock-based compensation
expense (88) (147)
Amortization of acquired
intangible assets (437) (437)
Severance and related charges - -
-------- --------
Non-GAAP research and
development $ 3,104 $ 3,245 -4% -1%
======== ========
GAAP sales and marketing $ 5,240 $ 6,668
Add back:
Depreciation and amortization (33) (61)
Stock-based compensation
expense (58) (132)
Amortization of acquired
intangible assets (67) (172)
Severance and related charges (27) (24)
-------- --------
Non-GAAP sales and marketing $ 5,055 $ 6,279 -19% -15%
======== ========
GAAP general and administrative $ 2,031 $ 2,246
Add back:
Depreciation and amortization (20) (18)
Stock-based compensation
expense (45) (140)
Amortization of acquired
intangible assets (8) (19)
Severance and related charges (10) -
Acquisition-related expenses - -
-------- --------
Non-GAAP general and
administrative $ 1,948 $ 2,069 -6% -2%
======== ========
GAAP operating expenses $ 10,946 $ 12,814
Add back:
Depreciation and amortization (99) (150)
Stock-based compensation
expense (191) (419)
Amortization of acquired
intangible assets (512) (628)
Severance and related charges (37) (24)
Acquisition-related expenses - -
-------- --------
Non-GAAP operating expenses $ 10,107 $ 11,593 -13% -8%
======== ========
Adjusted EBITDA
Net income (loss) $ (2,411) $ (3,237)
Add: Purchase accounting
adjustments to deferred revenue
related to acquisitions 16 20
Depreciation and amortization 354 549
Stock-based compensation
expense 236 513
Interest expense, net 422 333
Income tax provision (benefit) 832 334
Amortization of acquired
intangible assets 579 695
Acquisition-related expenses - -
Severance and related charges 47 24
-------- --------
Adjusted EBITDA $ 75 $ (769)
-------- --------
[1] Annual Contract Value (ACV) is defined as the annualized value of the
contractual obligations in place at the end of the reporting period.
[2] Backlog presented are derived from the deferred revenue on our balance
sheets plus unbilled and uncollected contractual commitments.
[3] New subscription and support ACV is defined as the annualized value of
new cloud, term license and support contractual obligations signed in the
reporting period.
[4] Gross bookings presented are derived from GAAP revenue plus the change
in Backlog from the beginning and the end of the reporting period.
[5] Constant currency growth rates presented are derived from converting
the current period results for entities reporting in currencies other than
U.S. Dollars into U.S. Dollars at the exchange rates in effect during the
prior period presented rather than the actual exchange rates in effect
during the current period.
MKR Group Investor Relations Todd Kehrli or Jim Byers Phone: 323-468-2300 Email: [email protected]
Source: eGain
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